Slide 1: Preliminary Results 2020
Preliminary Results 2020 Ralph Findlay, Chief Executive Officer Andrew Andrea, Chief Financial Officer
Slide 2: Ralph Findlay, Chief Executive Officer
Ralph Findlay Chief Executive Officer
Slide 3: Emerging from the crisis – a stronger, better focused business
3 Emerging from the crisis – a stronger, better focused business 1. Resilient Q4 trading performance post reopening • Pubs outperformed market by 7% 2. Transformational Carlsberg JV completed 30 October 3. Dynamic future pub strategy with simplified Exec structure 4. Vaccines key to removing restric
Slide 4: Andrew Andrea, Chief Financial Officer
Andrew Andrea Chief Financial Officer
Slide 5: Financial summary
5 Financial summary 2020 2019 Revenue £821m £1,174m Operating profit £74m £173m PBT £(22)m £95m EPS (1.7) pence 12.7 pence * Underlying results for the period 2020 earnings significantly impacted by COVID-19
Slide 6: LFL sales post Spring lockdown
6 LFL sales post Spring lockdown July August September October 6% (26)% (12)% (30)% LFL • EOHO sales • Good weather • Solid H1 • Increased restrictions in H2 Pubs 102 18 7 141 closed Improving sales hampered by trading restrictions from end of September
Slide 7: Cash flow
7 Cash flow 2020 2019 £m £m Operating cash flow 156 196 Net interest (89) (75) Pre-investment FCF 67 121 Organic capex (61) (85) Disposals 78 50 Dividend (30) (48) FCF pre new-build and acquisitions 54 38 New-build and acquisitions (3) (49) Net underlying cash flow 51 (11) Improved cash flow despite
Slide 8: Debt structure
8 Debt structure 2020 2019 £m £m Medium term (2024 maturity) 265 296 Long term Securitisation (2035 maturity) 727 745 Property leasing (35-40 year financing) 337 336 Net borrowings pre IFRS 16 1,329 1,377 Lease obligations under IFRS 16 304 22 Net debt post IFRS 16 1,633 1,399 Reduced net borrowings
Slide 9: Medium-term debt
9 Medium-term debt FY 2020 Maturity Facility Drawn Bank RCF Mar ’24 £360m £270m Private placement Nov ’24 £40m £40m COVID facility Nov ’20 £70m - Total £470m £310m Post JV proceeds (c£230m), deferred duty/VAT (c£50m) and swap closure (c£20m) Bank RCF Mar ’24 £280m c.£110m Private placement Nov ’24 £
Slide 10: COVID-19 response and current position
10 COVID-19 response and current position 1. Prompt response to Spring lockdown • £70m additional facility agreed to November 2020 • Bank/PP - covenant waivers/amendments to September 2020 • Securitisation: - waivers/amendments to December 2020 (99.6% voted, 96.1% in favour) - utilised £15m of liqui
Slide 11: Net asset value
11 Net asset value Non-cash Mainly cash receipts £1.22 £0.32 £0.90 £0.41 £0.03 £0.87 £0.45 £0.10 £0.39 2019 Goodwill NAV excl Property Other 2020 Profit on Contingent NAV goodwill disposal of payment* BeerCo Proforma *Value based on spot prices on 4 December 2020 COVID-19 triggered impairments offse
Slide 12: Ralph Findlay, Chief Executive Officer
Ralph Findlay Chief Executive Officer
Slide 13: COVID-19: response to March closure
13 COVID-19: response to March closure 1. Prioritise cash preservation • 93% of Group employees furloughed – 99% of pub teams • Temporary pay reductions of at least 20% across the Group • All non-essential spend, including capex, postponed • Suspension of dividends for FY 2020 2. Look after our peop
Slide 14: COVID-19: clear reopening plans
14 COVID-19: clear reopening plans 1. Well-positioned estate • Low city centre exposure, mainly suburban locations • 99% of pubs re-opened by year end • Most pubs have gardens/outside areas • “Inside-Out” programme to increase capacity in Autumn and Winter 2. Prioritise safety, retain pub ambience •
Slide 15: Pub trading since July 2020, pre-lockdown
15 Pub trading since 4 July 2020, pre-lockdown 2 1. 2020 Q4 LFL sales 90% of prior year levels; +7% vs market* • Strong wet-led performance • Food-led supported by Eat Out to Help Out • Guest satisfaction scores +11% compared to pre-COVID-19 scores 2. September/October sales impacted by additional r
Slide 16: Learnings: trends provide opportunities for our pubs
16 6 Learnings: trends provide opportunities for our pubs 1. Demand remains strong • Celebration and socialising outside the home matters more • Convenience and functional reasons to visit matter less • The appeal of the pub has endured the crisis 2. Value for experience is key to replacing price di
Slide 17: Post-November lockdown tier system is challenging
17 Post-November lockdown tier system is challenging England Tier Wales Scotland 1 2 3 open closed Managed 3 188 241 34 12 9 Partner 276 530 72 Total 3 464 771 106 12 9 • High percentage of T2 pubs remain open Trade will continue to be disrupted until restrictions are lifted
Slide 18: Future strategy: 3 pillars form the basis of our pub strategy
18 Future strategy: 3 pillars form the basis of our pub strategy Guest Obsessed Raise The Bar We Will Grow Value for More from guests Ways of working experience More from our people Operational Guest satisfaction excellence More from capex Focused strategy driving sales, margins and returns
Slide 19: Guest obsessed: insight-led decision making
19 Guest obsessed: insight-led decision making 1. Post JV completion – simplified, streamlined business • One pub business, wet-led and food-led pubs • Premium Pubs & Bars consolidated within pub structure • New Marketing & Commercial Director role central to development of guest insight 2. Consiste
Slide 20: 2021: new Exec structure reflects simplified business
20 2021: new Exec structure reflects simplified business Operations Director: Wet Led CFO Ed Hancock Andrew Andrea Marston’s: 19 Years Marston’s: 18 years Operations Director: Food Led HR Director Sharon Singh Liam Powell Marston’s: 8 years Marston’s: 5 years Marketing & Commercial Director Company
Slide 21: Raising the bar through brilliant execution
21 Raising the bar through brilliant execution 1. Continued focus on reducing complexity, higher standards • Reduced number of dishes/cook times - Quality of food and speed of service • Greater use of technology eg. table ordering – ‘Marston’s Tap’ 2. Increased focus on commercial management • Clear
Slide 22: "We will grow" – market dynamics, estate provide scope
22 “We will grow” – market dynamics, estate provide scope 1. More from guests • Well-positioned estate, refocused business • Marketing plans drive loyalty, retention and recruitment 2. More from our people • Increased training - online • Coaching and development of senior management • Succession pla
Slide 23: Transformational JV to create CMBC
23 Transformational JV to create CMBC* 1. Completed October 2020 – £233m received - A further <£34m due after 12 months 2. Long term JV to create a best-in-class, brand-led UK brewer with increased scale, resources and distribution reach 3. Marston’s Brewing Business valued at up to £580m (13.0x adj
Slide 24: Summary
24 Summary 1. Emerging from crisis a stronger business 2. Creation of CMBC has provided liquidity opportunity • Access to significant synergies 3. Current trading uncertain 4. Future: focused strategy drives sales, margins and returns Well placed to drive future growth
Slide 25: Appendices
» APPENDICES MARSTON'S
Slide 26: Financial Summary – Statutory basis
26 Financial Summary – Statutory basis 2020 2019 Revenue £821m £1,174m Operating profit £(293)m £106m PBT £(397)m £(20)m EPS (56.8) pence (2.8) pence
Slide 27: IFRS 16 impact
27 IFRS 16 impact 1. No impact on net cash flow • c.£20m switch between operating cash flow and financing to reflect reclassification of rent 2. Income statement • EBITDA up c£21m • Operating Profit up £11m • PBT down £3m 3. Balance sheet • Additional lease liabilities of £295m • Other net assets up
Slide 28: Securitised debt profile
28 Securitised debt profile Principal Step-up Final maturity Tranche Type outstanding at date date 3 October 2020 A2 Floating £209.2m July 2019 2027 A3 Fixed/Floating £200.0m April 2027 2032 A4 Floating £151.8m October 2012 2031 B Floating £155.0m July 2019 2035 Total £716.0m
Slide 29: High-quality pub estate
29 High-quality pub estate Pubs Lodges Total Number Value (£m) Number Value (£m) Value (£m) Securitised 948 1,119 7 13 1,132 Non-securitised Unsecured freehold 153 276 5 13 289 Freehold – property lease 113 291 7 18 309 Total freehold 1,214 1,686 19 44 1,730 Leasehold (IFRS 16 value) 154 251 11 18 2
Slide 30: Historical total lfl
30 Historical total lfl Destination Taverns Total and Premium 52 wks to 04/10/14 3.1% 2.1% 2.8% 52 wks to 03/10/15 1.8% 2.0% 1.9% 52 wks to 01/10/16 2.3% 2.7% 2.4% 26 wks to 01/04/17 1.1% 1.1% 1.1% 52 wks to 30/09/17 0.9% 1.6% 1.1% 26 wks to 31/03/18 (1.8%) 2.9% - 52 wks to 29/09/18 (1.2)% 3.8% 0.6%
Slide 31: Securitisation profile
31 Securitisation profile Securitised Debt Service 90 Max £81.5m Debt Service 80 70 A3 step up 60 Principal 50 £m 40 Interest 30 20 10 0 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Financial year FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Slide 32: www.marstons.co.uk
www.marstons.co.uk